We use the workplace experiences of transgender people – individuals who change their gender typically with hormone therapy and surgery – to provide new insights into the long-standing question of what role gender plays in shaping workplace outcomes. Using an original survey of male-to-female and female-to-male transgender people, we document the earnings and employment experiences of transgender people before and after their gender transitions. We find that while transgender people have the same human capital after their transitions, their workplace experiences often change radically. We estimate that average earnings for female-to-male transgender workers increase slightly following their gender transitions, while average earnings for male-to-female transgender workers fall by nearly 1/3. This finding is consistent with qualitative evidence that for many male-to-female workers, becoming a woman often brings a loss of authority, harassment, and termination, but that for many female-to-male workers, becoming a man often brings an increase in respect and authority. These findings challenge the omitted variables explanations for the gender pay gap and illustrate the often hidden and subtle processes that produce gender inequality in workplace outcomes.

This study is a very important addition to the gender pay gap issue, and it is also an important look at the treatment of transgendered people in the workplace aside from that. I am curious whether the very negative treatment of male-to-female workers embodies not just a judgment about the value of women workers, which is certainly one inference we could make, but whether it also embodies a judgment about the decision of a male person to become a female one. In other words, whether it is this change from privileged status to unprivileged status that is especially scorned. There is an interesting potential parallel in the parenting responsibilities literature that Joan Williams has written about. Men who who are primary caregivers tend to be viewed by outsiders as mentally deficient in a fundamental way, similar to those who are mentally retarded or very elderly. And so, female people in female roles are less privileged than male people in male roles, but male people in female roles are particularly penalized.